Product Code Database
Medicaid is a government program in the United States that provides health insurance for adults and children with limited income and resources. The program is partially funded and primarily managed by state governments, which also have wide latitude in determining eligibility and benefits, but the federal government sets baseline standards for state Medicaid programs and provides a significant portion of their funding. States are not required to participate in the program, although all have since 1982.
Medicaid was established in 1965, part of the Great Society set of programs during President Lyndon B. Johnson's Administration, and was significantly expanded by the Affordable Care Act (ACA), which was passed in 2010. In most states, any member of a household with income up to 138% of the federal poverty line qualifies for Medicaid coverage under the provisions of the ACA. A 2012 Supreme Court decision established that states may continue to use pre-ACA Medicaid eligibility standards and receive previously established levels of federal Medicaid funding, which led some Republican-controlled states to not expand Medicaid coverage. The 2025 One Big Beautiful Bill Act established requirements that will begin in 2027 for most able-bodied adult Medicaid enrollees to work or volunteer for 80 hours per month in order to maintain coverage.
Medicaid is the largest source of funding for medical and health-related services for people with low income in the United States, providing taxpayer-funded health insurance to 85 million low-income and disabled people as of 2022; in 2019, the program paid for half of all U.S. births. In 2023, the total (federal and state) annual cost of Medicaid was $870 billion, with an average cost per enrollee of $7,600 for 2021. 37% of enrollees were children, but they only accounted for 15% of the spending, ($3,000 per person) while seniors and disabled persons accounted for 21% of enrollees and 52% of spending (more than $18,000 per person). In general, Medicaid recipients must be U.S. citizens or qualified non-citizens, and may include low-income adults, their children, and people with certain Disability. Medicaid also covers long-term services and supports, including both nursing home care and home- and community-based services, for those with low incomes and minimal assets. Of the 7.7 million Americans who used long-term services and supports in 2020, about 5.6 million were covered by Medicaid.
Along with Medicare, Tricare, ChampVA, and CHIP, Medicaid is one of the several Federal Government-sponsored medical insurance programs in the United States. Medicaid covers healthcare costs for people with low incomes; Medicare is a universal program providing health coverage for the elderly; and the CHIP program covers uninsured children in families with incomes that are too high to be covered by Medicaid. Medicaid offers elder care benefits not normally covered by Medicare, including nursing home care and personal care services. There are also dual health plans for people who have both Medicaid and Medicare.
Research shows that existence of the Medicaid program improves health outcomes, health insurance coverage, access to health care, and recipients' financial security and provides economic benefits to states and health providers. In American politics, the Democratic Party tends to support Medicaid while the Republican Party is divided on reductions in Medicaid spending.
Because service level costs vary depending on the care and needs of the enrolled, a cost per person average is only a rough measure of actual cost of care. The annual cost of care will vary state to state depending on state approved Medicaid benefits, as well as the state specific care costs. A 2014 Kaiser Family Foundation report estimates the national average per capita annual cost of Medicaid services for children to be $2,577, adults to be $3,278, persons with disabilities to be $16,859, aged persons (65+) to be $13,063, and all Medicaid enrollees to be $5,736.
By 1982, all states were participating. The last state to do so was Arizona.
The Medicaid Drug Rebate Program and the Health Insurance Premium Payment Program (HIPP) were created by the Omnibus Budget Reconciliation Act of 1990 (OBRA-90). This act helped to add Section 1927 to the Social Security Act of 1935 and became effective on January 1, 1991. This program was formed due to the costs that Medicaid programs were paying for discount price outpatient drugs.
The Omnibus Budget Reconciliation Act of 1993 (OBRA-93) amended Section 1927 of the Act, bringing changes to the Medicaid Drug Rebate Program. It requires states to implement a Medicaid estate recovery program to recover from the estate of deceased beneficiaries the long-term-care-related costs paid by Medicaid, and gives states the option of recovering all non-long-term-care costs, including full medical costs.
Medicaid also offers a Fee for Service (Direct Service) Program to schools throughout the United States for the reimbursement of costs associated with the services delivered to students with special education needs. Federal law mandates that children with disabilities receive a "free appropriate public education" under Section 504 of The Rehabilitation Act of 1973. Decisions by the United States Supreme Court and subsequent changes in federal law require states to reimburse part or all of the cost of some services provided by schools for Medicaid-eligible disabled children.
]]
The Affordable Care Act (ACA), passed in 2010, substantially expanded the Medicaid program. Before the law was passed, some states did not allow able-bodied adults to participate in Medicaid, and many set income eligibility far below the Federal poverty level. Under the provisions of the law, any state that participated in Medicaid would need to expand coverage to include anyone earning up to 138% of the Federal poverty level beginning in 2014. The costs of the newly covered population would initially be covered in full by the Federal government, although states would need to pay for 10% of those costs by 2020.
However, in 2012, the Supreme Court held in National Federation of Independent Business v. Sebelius that withdrawing all Medicaid funding from states that refused to expand eligibility was unconstitutionally coercive. States could choose to maintain pre-existing levels of Medicaid funding and eligibility, and some did; over half the national uninsured population lives in those states. As of March 2023, 40 states have accepted the Affordable Care Act Medicaid extension, as has the District of Columbia, which has its own Medicaid program; 10 states have not. Among adults aged 18 to 64, states that expanded Medicaid had an uninsured rate of 7.3% in the first quarter of 2016, while non-expansion states had a 14.1% uninsured rate.
The Centers for Medicare and Medicaid Services (CMS) estimated that the cost of expansion was $6,366 per person for 2015, about 49 percent above previous estimates. An estimated 9 to 10 million people had gained Medicaid coverage, mostly low-income adults. The Kaiser Family Foundation estimated in October 2015 that 3.1 million additional people were not covered in states that rejected the Medicaid expansion.
In some states that chose not to expand Medicaid, income eligibility thresholds are significantly below 133% of the poverty line. Some of these states do not make Medicaid available to non-pregnant adults without disabilities or dependent children, no matter their income. Because subsidies on commercial insurance plans are not available to such individuals, most have few options for obtaining any medical insurance. For example, in Kansas, where only non-disabled adults with children and with an income below 32% of the poverty line were eligible for Medicaid, those with incomes from 32% to 100% of the poverty level ($6,250 to $19,530 for a family of three) were ineligible for both Medicaid and federal subsidies to buy insurance.
Studies of the impact of Medicaid expansion rejections calculated that up to 6.4 million people would have too much income for Medicaid but not qualify for exchange subsidies. Several states argued that they could not afford the 10% contribution in 2020. Some studies suggested that rejecting the expansion would cost more due to increased spending on uncompensated emergency care that otherwise would have been partially paid for by Medicaid coverage.
A 2016 study found that residents of Kentucky and Arkansas, which both expanded Medicaid, were more likely to receive health care services and less likely to incur emergency room costs or have trouble paying their medical bills. Residents of Texas, which did not accept the Medicaid expansion, did not see a similar improvement during the same period. Kentucky opted for increased managed care, while Arkansas subsidized private insurance. Later, Arkansas and Kentucky governors proposed reducing or modifying their programs. From 2013 to 2015, the uninsured rate dropped from 42% to 14% in Arkansas and from 40% to 9% in Kentucky, compared with 39% to 32% in Texas.
A 2016 DHHS study found that states that expanded Medicaid had lower premiums on exchange policies because they had fewer low-income enrollees, whose health, on average, is worse than that of people with higher income.
The Census Bureau reported in September 2019 that states that expanded Medicaid under ACA had considerably lower uninsured rates than states that did not. For example, for adults between 100% and 399% of poverty level, the uninsured rate in 2018 was 12.7% in expansion states and 21.2% in non-expansion states. Of the 14 states with uninsured rates of 10% or greater, 11 had not expanded Medicaid. A July 2019 study by the National Bureau of Economic Research (NBER) indicated that states enacting Medicaid expansion exhibited statistically significant reductions in mortality rates.
The ACA was structured with the assumption that Medicaid would cover anyone making less than 133% of the Federal poverty level throughout the United States; as a result, premium tax credits are only available to individuals buying private health insurance through exchanges if they make more than that amount. This has given rise to the so-called Medicaid coverage gap in states that have not expanded Medicaid: there are people whose income is too high to qualify for Medicaid in those states, but too low to receive assistance in paying for private health insurance, which is therefore unaffordable to them.
On July 4, 2025, President Donald Trump signed the One Big Beautiful Bill Act, intended in part to implement this resolution. The act cut Medicaid in a number of ways: while it did not repeal the ACA's Medicaid expansion, it mandated work requirements for able-bodied Medicaid recipients. It also requires Medicaid recipients above the federal poverty line to pay more fees for coverage; adds new verification requirements; increases the number of times states need to check the eligibility of their Medicaid expansion recipients; prohibits Medicaid from funding nonprofits that provide abortion care; makes it harder for illegal immigrants to use Medicaid; bans pharmacy benefit managers from using spread pricing; and puts limits on so-called "provider taxes" that states impose on healthcare providers to fund their portion of Medicaid spending. The non-partisan Congressional Budget Office (CBO) estimated that it will reduce the number of people on Medicaid by several million.; the CBO estimates that the work requirements in particular will lead 11 million to lose their Medicaid coverage, many of whom already work or qualify for exemptions but will not be able to get through the red tape.
The bill prompted claims that undocumented immigrants are on Medicaid. Undocumented immigrants are already ineligible for full Medicaid benefits, and many undocumented immigrants access state-funded health programs rather than federal Medicaid. According to a CBO analysis, the bill's provisions could lead some states to cut back those state-funded health programs, potentially causing an estimated 1.4 million people to lose state-level health coverage, including undocumented immigrants. When commenting on the Trump administration's One Big Beautiful Bill Act and the impact of the Medicaid provisions on the economy, USDA Secretary Brooke Rollins stated that 34 million able-bodied adults on Medicaid should be working. According to the Government Accountability Office, roughly 70% of Medicaid recipients already work at least 35 hours per week but still qualify due to low wage.
State participation in Medicaid is voluntary; however, all states have participated since 1982. In some states Medicaid is subcontracted to private health insurance companies, while other states pay providers (i.e., doctors, clinics and hospitals) directly. There are many services that can fall under Medicaid and some states support more services than other states. The most provided services are intermediate care for mentally disabled, prescription drugs and nursing facility care for under 21-year-olds. The least provided services include institutional religious (non-medical) health care, respiratory care for ventilator dependent and PACE (inclusive elderly care).
Most states administer Medicaid through their own programs. A few of those programs include:
As of January 2012, Medicaid and/or CHIP funds could be obtained to help pay employer health care premiums in Alabama, Alaska, Arizona, Colorado, Florida, and Georgia.
Eligibility is primarily determined using the modified adjusted gross income system, which standardizes income calculations across Medicaid, CHIP, and health insurance marketplace subsidies. However, certain groups, such as seniors and individuals with disabilities, have their eligibility determined using Supplemental Security Income (SSI) rules, which may include asset tests. Medicaid also includes provisions for individuals with significant medical expenses who do not otherwise qualify financially, allowing them to "spend down" their income on medical costs to become eligible.
In addition to financial criteria, Medicaid applicants must meet non-financial requirements, including residency in the state where they apply and U.S. citizenship or qualifying non-citizen status. Some eligibility groups, such as children in foster care under Title IV-E and certain former foster youth, automatically qualify regardless of income. Coverage begins either on the date of application or the first day of the application month, with potential retroactive coverage for up to three months.
States also have the option to offer "medically needy" programs for individuals whose incomes exceed standard Medicaid limits but who have substantial medical expenses. Additional Medicaid policies address estate recovery, third-party liability, and spousal impoverishment protections for long-term care applicants. If an individual is denied Medicaid, they have the right to appeal the decision through state-administered processes.
In general, Medicaid plans pay providers significantly less than commercial insurers or Medicare would pay for the same care, paying around 67% as much as Medicare would for primary care and 78% as much for other services. This disparity has been linked to lower provider rates of participation in Medicaid programs vs Medicare or commercial insurance, and thus decreased access to care for Medicaid patients. One component of the Affordable Care Act was a federally-funded increase in 2013 and 2014 in Medicaid payments to bring them up to 100% of equivalent Medicare payments, in an effort to increase provider participation. Most states did not subsequently continue this provision.
Loss of income and medical insurance coverage during the Great Recession resulted in a substantial increase in Medicaid enrollment in 2009. Nine U.S. states showed an increase in enrollment of 15% or more, putting a heavy strain on state budgets.
The Kaiser Family Foundation reported that for 2013, Medicaid recipients were 40% white, 21% black, 25% Hispanic, and 14% other races.
Medicaid is a program that is not solely funded at the federal level. States provide up to half of the funding for Medicaid. In some states, counties also contribute funds. Unlike Medicare, Medicaid is a means-tested, needs-based social welfare or social protection program rather than a social insurance program. Eligibility is determined largely by income. The main criterion for Medicaid eligibility is limited income and financial resources, a criterion which plays no role in determining Medicare coverage. Medicaid covers a wider range of health care services than Medicare.
Some people are eligible for both Medicaid and Medicare and are known as Medicare dual eligible or medi-medis. In 2001, about 6.5 million people were enrolled in both Medicare and Medicaid. In 2013, approximately 9 million people qualified for Medicare and Medicaid.
Some states operate a program known as the Health Insurance Premium Payment Program (HIPP). This program allows a Medicaid recipient to have private health insurance paid for by Medicaid. As of 2008 relatively few states had premium assistance programs and enrollment was relatively low. Interest in this approach remained high, however.
Included in the Social Security program under Medicaid are Dentistry. Registration for dental services is optional for people older than 21 years but required for people eligible for Medicaid and younger than 21. Minimum services include pain relief, restoration of teeth and maintenance for dental health. EPSDT (EPSDT) is a mandatory Medicaid program for children that focuses on prevention, early diagnosis and treatment of medical conditions. Oral screenings are not required for EPSDT recipients, and they do not suffice as a direct dental referral. If a condition requiring treatment is discovered during an oral screening, the state is responsible for paying for this service, regardless of whether or not it is covered on that particular Medicaid plan.
As of 2013, Medicaid is a program intended for those with low income, but a low income is not the only requirement to enroll in the program. Eligibility is categorical—that is, to enroll one must be a member of a category defined by statute; some of these categories are: low-income children below a certain wage, pregnant women, parents of Medicaid-eligible children who meet certain income requirements, low-income disabled people who receive Supplemental Security Income and/or Social Security Disability (SSD), and low-income seniors 65 and older. The details of how each category is defined vary from state to state.
As of 2015, asset tests varied; for example, eight states did not have an asset test for a buy-in available to working people with disabilities, and one state had no asset test for the aged/blind/disabled pathway up to 100% of the Federal Poverty Level.
More recently, many states have authorized financial requirements that will make it more difficult for working-poor adults to access coverage. In Wisconsin, nearly a quarter of Medicaid patients were dropped after the state government imposed premiums of 3% of household income. A survey in Minnesota found that more than half of those covered by Medicaid were unable to obtain prescription medications because of Copayment.
The Deficit Reduction Act of 2005 (DRA) requires anyone seeking Medicaid to produce documents to prove that he is a United States citizen or resident alien. An exception is made for Emergency Medicaid where payments are allowed for the pregnant and disabled regardless of immigration status. Special rules exist for those living in a nursing home and disabled children living at home.
The penalty is determined by dividing the average monthly cost of nursing home care in the area or State into the amount of assets gifted. Therefore, if a person gifted $60,000 and the average monthly cost of a nursing home was $6,000, one would divide $6000 into $60,000 and come up with 10. 10 represents the number of months the applicant would not be eligible for Medicaid.
All transfers made during the five-year look-back period are totaled, and the applicant is penalized based on that amount after having already dropped below the Medicaid asset limit. This means that after dropping below the asset level ($2,000 limit in most states), the Medicaid applicant will be ineligible for a period of time. The penalty period does not begin until the person is eligible for Medicaid.42 U.S.C. 1396p
Elders who gift or transfer assets can be caught in the situation of having no money but still not being eligible for Medicaid.
Nonimmigrants and unauthorized aliens are not eligible for most federal benefits, regardless of whether they are means tested, with notable exceptions for emergency services (e.g., Medicaid for emergency medical care), but states have the option to cover nonimmigrant and unauthorized aliens who are pregnant or who are children, and can meet the definition of "lawfully residing" in the United States. Special rules apply to several limited noncitizen categories: certain "cross-border" American Indians, Hmong people/Highland Laotians, and conditional entrants, and cases of abuse.
Aliens outside the United States who seek to obtain visas at U.S. consulates overseas or admission at U.S. ports of entry are generally denied entry if they are deemed "likely at any time to become a public charge." Aliens within the United States who seek to adjust their status to that of lawful permanent resident (LPR), or who entered the United States without inspection, are also generally subject to exclusion and deportation on public charge grounds. Similarly, LPRs and other aliens who have been admitted to the United States are removable if they become a public charge within five years after the date of their entry due to causes that preexisted their entry.
A 1999 policy letter from immigration officials defined "public charge" and identified which benefits are considered in public charge determinations, and the policy letter underlies current regulations and other guidance on the public charge grounds of inadmissibility and deportability. Collectively, the various sources addressing the meaning of public charge have historically suggested that an alien's receipt of public benefits, per se, is unlikely to result in the alien being deemed to be removable on public charge grounds.
One-third of children and over half (59%) of low-income children are insured through Medicaid or SCHIP. The insurance provides them with access to preventive and primary services which are used at a much higher rate than for the uninsured, but still below the utilization of privately insured patients. As of 2014, rate of uninsured children was reduced to 6% (5 million children remain uninsured).
Medicaid super utilizers (defined as Medicaid patients with four or more admissions in one year) account for more hospital stays (5.9 vs.1.3 stays), longer lengths of stay (6.1 vs. 4.5 days), and higher hospital costs per stay ($11,766 vs. $9,032). Medicaid super-utilizers were more likely than other Medicaid patients to be male and to be aged 45–64 years. Common conditions among super-utilizers include and Mental disorder, as well as diabetes, cancer treatment, sickle cell anemia, sepsis, congestive heart failure, chronic obstructive pulmonary disease, and complications of devices, implants, and grafts.
Medicaid funding has become a major budgetary issue for many states over the last few years, with states, on average, spending 16.8% of state general funds on the program. If the federal match expenditure is also counted, the program, on average, takes up 22% of each state's budget. "Medicaid and State Budgets: Looking at the Facts" , Georgetown University Center for Children and Families, May 2008. Some 43 million Americans were enrolled in 2004 (19.7 million of them children) at a total cost of $295 billion. In 2008, Medicaid provided health coverage and services to approximately 49 million low-income children, pregnant women, elderly people, and disabled people. Federal Medicaid outlays were estimated to be $204 billion in 2008. "Budget of the United States Government, FY 2008", Department of Health and Human Services, 2008. In 2011, there were 7.6 million hospital stays billed to Medicaid, representing 15.6% (approximately $60.2 billion) of total aggregate inpatient hospital costs in the United States.Torio CM, Andrews RM. National Inpatient Hospital Costs: The Most Expensive Conditions by Payer, 2011. HCUP Statistical Brief #160. Agency for Healthcare Research and Quality, Rockville, MD. August 2013. [10] At $8,000, the mean cost per stay billed to Medicaid was $2,000 less than the average cost for all stays.
Medicaid does not pay benefits to individuals directly; Medicaid sends benefit payments to health care providers. In some states Medicaid beneficiaries are required to pay a small fee (co-payment) for medical services. Medicaid is limited by federal law to the coverage of "medically necessary services."
On November 25, 2008, a new federal rule was passed that allows states to charge premiums and higher co-payments to Medicaid participants. search: 42 CFR Parts 447 and 457 This rule enabled states to take in greater revenues, limiting financial losses associated with the program. Estimates figure that states will save $1.1 billion while the federal government will save nearly $1.4 billion. However, this meant that the burden of financial responsibility would be placed on 13 million Medicaid recipients who faced a $1.3 billion increase in co-payments over 5 years. The major concern is that this rule will create a disincentive for low-income people to seek healthcare. It is possible that this will force only the sickest participants to pay the increased premiums and it is unclear what long-term effect this will have on the program.
A 2019 study found that Medicaid expansion in Michigan had net positive fiscal effects for the state.
A 2016 paper found that Medicaid has substantial positive long-term effects on the health of recipients: "Early childhood Medicaid eligibility reduces mortality and disability and, for whites, increases extensive margin labor supply, and reduces receipt of disability transfer programs and public health insurance up to 50 years later. Total income does not change because earnings replace disability benefits." The government recoups its investment in Medicaid through savings on benefit payments later in life and greater payment of taxes because recipients of Medicaid are healthier: "The government earns a discounted annual return of between 2% and 7% on the original cost of childhood coverage for these cohorts, most of which comes from lower cash transfer payments." A 2019 National Bureau of Economic Research paper found that when Hawaii stopped allowing Compact of Free Association (COFA) migrants to be covered by the state's Medicaid program that Medicaid-funded hospitalizations declined by 69% and emergency room visits declined by 42% for this population, but that uninsured ER visits increased and that Medicaid-funded ER visits by infants substantially increased. Another NBER paper found that Medicaid expansion reduced mortality.
A 2021 American Economic Review study found that early childhood access to Medicaid "reduces mortality and disability, increases employment, and reduces receipt of disability transfer programs up to 50 years later. Medicaid has saved the government more than its original cost and saved more than 10 million quality adjusted life years."
A sequence of two high-profile studies by a team from the Massachusetts Institute of Technology and the Harvard School of Public Health found that "Medicaid coverage generated no significant improvements in measured physical health outcomes in the first 2 years ," but did "increase use of health care services, raise rates of diabetes detection and management, lower rates of depression, and reduce financial strain."
The study found that in the first year:
The studies spurred a debate between proponents of expanding Medicaid coverage and fiscal conservatives challenging the value of this expansive government program.
Certain states in which there is a Republican-controlled legislature may be forced to expand Medicaid in ways extending beyond increasing existing eligibility in the form of waivers for certain Medicaid requirements so long as they follow certain objectives. In its implementation, this has meant using Medicaid funds to pay for low-income citizens' health insurance; this private-option was originally carried out in Arkansas but was adopted by other Republican-led states. However, private coverage is more expensive than Medicaid and the states would not have to contribute as much to the cost of private coverage.
|
|
